Pension funds a good alternative to finance infrastructure, water projects - Regional

Pension funds provide a good alternative to financing infrastructure development projects while strengthening local economies, K&M Engineering CEO Michael Kappaz said at the second CG/LA Global Infrastructure Leadership Forum.

Kappaz mentioned Chile and Colombia as examples of mature economies with strong pension fund models that are investing in infrastructure, which also promotes the countries' economic and social development.

The benefits of having pension funds invest in infrastructure are evident in Chile, and Colombia's efforts towards doing the same shows the trend is likely to expand, an infrastructure investment analyst told BNamericas.

Enrique García, president of the Andean Development Corporation (CAF), also spoke of these benefits, saying they help boost local capitals markets.

Of a total 180 countries analyzed, Chile is the only one in the region to rank among the world's 30 most competitive countries, according to a study released by the World Economic Forum, said García, noting that the study was based on perception, which is directly linked to infrastructure development.

Latin American countries invest an average 2.5% of GDP in infrastructure, compared to the 30% invested by China, said García, stressing the need to at least double the region's infrastructure investments.

However, García also pointed out that the region's economies are much stronger today than they used to be.

The impact of the global crisis will be much less than it would have been eight years ago, but steps should still be taken to combat the situation and lessen its impact, he said.

CG/LA president Norman Anderson also referred to innovative ways to develop infrastructure, such as the pension fund model, to ensure the region's wellbeing.

Projects in greatest need of financing and with high impact levels include multi-modal transport initiatives - such as highways, railways, airports and ports - as well as waterways.

Other indispensible initiatives are water and sanitation projects, which help reduce poverty and health spending while promoting further development, the infrastructure investment analyst said.

At the same time, these types of projects provide long-term solutions, the analyst added.

The officials are taking part in the second CG/LA Global Infrastructure Leadership Forum being held in Washington, DC from December 10-12.

Eva Medalla
Business News Americas

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